Teleflex (NYSE:TFX) plans another round of restructuring — including manufacturing offshoring — to better position itself for long-term growth.
In a Form 8-K filed with the SEC today, the Wayne, Pennsylvania–based maker of critical care and surgical products said it expects to incur $31 million to $40 million in restructuring costs through 2023. About $18 million to $22 million of that amount involves termination benefits.
Teleflex did not specify how many workers it plans to lay off. It listed 14,000 employees in its most recent annual report.
Company officials said in the filing that they developed the restructuring plan to offset increasing costs and inflationary pressures in the healthcare industry.
The plan primarily involves relocating certain manufacturing operations to existing lower-cost locations, according to the company. In addition, Teleflex plans to streamline various business functions across the organization.
Teleflex expects to achieve annual pre-tax savings of $21 million to $23 million once it fully implements the restructuring plan.
Disappointing Q3 earnings for Teleflex
The restructuring plans come more than a month after Teleflex announced third-quarter results that beat the earnings consensus on Wall Street but missed revenue estimates.
In addition, analysts pointed out that Teleflex missed sales expectations around its UroLift system, a minimally invasive treatment for lower urinary tract symptoms due to benign prostatic hyperplasia. However, analysts generally seem bullish about future UroLift sales.
For example, Mike Matson at Needham & Co. kept his Buy rating on TFX shares after the Q3 report. “Our recent urologist survey indicated that UroLift remains highly regarded by urologists and that it should see double-digit growth over the next 12 months,” he said at the time.
Teleflex engaged in a previous restructuring in 2021. Truist analysts noted after the latest announcement that Teleflex engages in restructurings every few years. They said the latest one is on the smaller end of the spectrum and seems more of an offset to incremental inflation pressures.